A CVA is a legal arrangement which allows a company in debt to continue trading. It is a very attractive rescue package that enables insolvent companies to avoid liquidation.
Write Off Debts
In a CVA the company and its creditors (including HM Revenue and Customs) agree to a phased repayment of debts over a defined period, usually 5 years. These repayments are made from future trading profits. Normally only an agreed fraction of debts will be repaid and interest and other charges will be frozen during the period of a CVA.
Normally a CVA will be accompanied by a restructure within the company to improve the business. Once the CVA is completed all remaining unsecured debts are written off and the company continues to trade profitably. The characteristics of a CVA are:
- Do a deal with your creditors
- Continue trading
Appoint An Advisor
A company wishing to arrange a CVA needs to appoint an advisor (insolvency practitioner) to draw up the arrangement and oversee its implementation. This is where Beesley and Company can help. As Insolvency Practitioners we have extensive experience of compiling and administering voluntary arrangements.